UNITED STATES
	SECURITIES AND EXCHANGE COMMISSION
	Washington, D.C. 20549

	FORM 10-Q

[X]	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2008 or

[ ]	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from               to

Commission File No. 0-13298

	MORGAN STANLEY CORNERSTONE FUND II L.P.

	(Exact name of registrant as specified in its charter)

          New York                                      13-3212871
(State or other jurisdiction of                 	  (I.R.S. Employer
incorporation or organization)                 	  Identification No.)

Demeter Management Corporation
522 Fifth Avenue, 13th Floor
New York, NY 						              10036
(Address of principal executive offices)                (Zip Code)

Registrant's telephone number, including area code   (212) 296-1999







(Former name, former address and former fiscal year, if changed since
last report)


Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.

Yes    X        No


Indicate by check mark whether the registrant is a large accelerated
filer, an accelerated filer, a non-accelerated filer, or a smaller
reporting company.  See the definitions of ?large accelerated filer?,
?accelerated filer? and ?smaller reporting company? in Rule 12b-2 of the
Exchange Act.

Large accelerated filer_______ 		Accelerated filer_______
Non-accelerated filer   X   		Smaller reporting company_______

Indicate by check mark whether the registrant is a shell company (as
defined in Rule 12b-2 of the Exchange Act).  Yes ___  No  X



	<page> <table> MORGAN STANLEY CORNERSTONE FUND II L.P.

	INDEX TO QUARTERLY REPORT ON FORM 10-Q

	June 30, 2008

<caption>



PART I. FINANCIAL INFORMATION

				<c>
Item 1. Financial Statements

		Statements of Financial Condition as of June 30, 2008
		(Unaudited) and December 31, 2007 ......................... 2

		Statements of Operations for the Three and Six Months
		Ended June 30, 2008 and 2007(Unaudited).....................3

		Statements of Changes in Partners? Capital for the
		Six Months Ended June 30, 2008 and 2007 (Unaudited).........4

		Statements of Cash Flows for the Six Months Ended
		June 30, 2008 and 2007 (Unaudited)..........................5

		Condensed Schedules of Investments as of June 30, 2008
		(Unaudited) and December 31, 2007...........................6

		Notes to Financial Statements (Unaudited) ...............7-14

Item 2.	Management?s Discussion and Analysis of
			Financial Condition and Results of Operations .......15-28

Item 3.	Quantitative and Qualitative Disclosures About
			Market Risk ........................................ 28-40

Item 4.	Controls and Procedures .............................40-41

Item 4T.	Controls and Procedures ................................41


PART II. OTHER INFORMATION

Item 1A.Risk Factors............................................42

Item 5.	Other Information....................................42-43

Item 6.	Exhibits................................................44

</table>



<page> <table> PART I.  FINANCIAL INFORMATION

Item 1.  Financial Statements

	MORGAN STANLEY CORNERSTONE FUND II L.P.
	STATEMENTS OF FINANCIAL CONDITION
<caption>
	June 30, 	December 31,
	        2008        	        2007
	$	$
	(Unaudited)
ASSETS

	<c>	<c>
Trading Equity:
	Unrestricted cash	6,596,220	6,584,973
	Restricted cash	       214,841	        444,742

	     Total cash	6,811,061    	     7,029,715

	Net unrealized gain on open contracts (MS&Co.)	        283,320	        98,394

	     Total Trading Equity	7,094,381	 7,128,109

Interest receivable (MS&Co.)	               8,986	         15,021
Due from MS&Co.	                             280	          3,416

	     Total Assets	   7,103,647	    7,146,546

LIABILITIES AND PARTNERS' CAPITAL

Liabilities

Accrued administrative fees payable (MS&Co.)	29,050	         30,222
Accrued management fees	         20,634	          20,756
Redemptions payable	          16,136	          92,051

   	    Total Liabilities	          65,820	        143,029

Partners? Capital

Limited Partners (1,862.729 and
   2,025.388 Units, respectively)	6,787,963	6,774,185
General Partner (68.567 Units)	                                                              249,864   	         229,332

	     Total Partners? Capital	    7,037,827	      7,003,517

	     Total Liabilities and Partners? Capital	    7,103,647	      7,146,546

NET ASSET VALUE PER UNIT	      3,644.10	                             3,344.64

<fn>


	The accompanying notes are an integral part
	of these financial statements.
</table>

<page> <table> 	MORGAN STANLEY CORNERSTONE FUND II L.P.
	STATEMENTS OF OPERATIONS
(Unaudited)

<caption>
                          For the Three Months	                          For the Six Months
  	                  Ended June 30,     	                          Ended June 30,

                                     2008            2007    	       2008   	       2007
                                      $	                 $	           $ 	     $

	<c>	<c>			<c>			<c>
INVESTMENT INCOME
	Interest income (MS&Co.)	     23,303		    79,034		       53,800		  165,245

EXPENSES
	Brokerage commissions (MS&Co.)	73,388	130,746	182,757		251,774
	Management fees	61,278    	73,195	123,799 	    	146,940
	Administrative expenses	10,000 	   12,000	  19,000	 	       24,000
	Transaction fees and costs	        3,826	           8,147	        9,726		       19,145

		   Total Expenses 	    148,492	       224,088		    335,282	     441,859

NET INVESTMENT LOSS 	   (125,189)	      (145,054)	   (281,482)		    (276,614)

TRADING RESULTS
Trading profit (loss):
	Realized	116,533	1,193,787	698,319		556,411
	Net change in unrealized	     39,316	         40,932	    184,926	 	   (151,088)

	           Total Trading Results	    155,849	    1,234,719	    883,245		    405,323

NET INCOME 	     30,660	    1,089,665	    601,763		     128,709


NET INCOME ALLOCATION

	Limited Partners	29,358	1,052,764	581,231 		 123,927
	General Partner 	                1,302	    36,901	20,532 		4,782


NET INCOME PER UNIT

	Limited Partners                                              	19.00  	441.92		  	299.46	    66.57
	General Partner                                              	  19.00	441.92		  	299.46	    66.57



			                                                                      Units                     Units	Units   		Units
WEIGHTED AVERAGE NUMBER
	OF UNITS OUTSTANDING                               1,957.824		2,435.603	  2,001.707	    	2,495.850

  		 	<fn>

	The accompanying notes are an integral part
	of these financial statements. </table>
<page> <table> MORGAN STANLEY CORNERSTONE FUND II L.P.
	STATEMENTS OF CHANGES IN PARTNERS? CAPITAL
	For the Six Months Ended June 30, 2008 and 2007
	(Unaudited)
<caption>




			                                                         Units of
			                                                      Partnership	 Limited	     General
			                                                         Interest    	     Partners   	          Partner    	     Total
					$	      $	 $

			<c>	<c>	<c>	<c>
Partners? Capital,
   December 31, 2006	2,611.342	 8,722,240	295,488	9,017,728

Net Income	?	123,927	4,782	128,709

Redemptions	    (239.131)	 (765,816)	       (30,765)	  (796,581)

Partners? Capital,
   June 30, 2007	  2,372.211	 8,080,351	  269,505	 8,349,856





Partners? Capital,
   December 31, 2007	2,093.955	 6,774,185	229,332	7,003,517

Net Income	?	581,231	20,532	601,763

Redemptions	    (162.659)	  (567,453)	          ?     	  (567,453)

Partners? Capital,
   June 30, 2008	  1,931.296	 6,787,963	  249,864	 7,037,827





<fn>








The accompanying notes are an integral part
	of these financial statements.
</table>
<page> <table> 	MORGAN STANLEY CORNERSTONE FUND II L.P.
	STATEMENTS OF CASH FLOWS
(Unaudited)



<caption>

				  For the Six Months Ended June 30,

				            2008      	      2007
				     $	$

			<c>	<c>
CASH FLOWS FROM OPERATING ACTIVITIES

Net income 	601,763	128,709
Noncash item included in net income:
	Net change in unrealized	(184,926)	151,088

(Increase) decrease in operating assets:
	Restricted cash	229,901	221,977
	Interest receivable (MS&Co.)	6,035	2,921
	Due from MS&Co.	3,136                                (6,707)

Increase (decrease) in operating liabilities:
	Accrued administrative expenses	(1,172)	1,910
	Accrued management fees	          (122)	                               (1,896)

Net cash provided by operating activities	    654,615	     498,002


CASH FLOWS FROM FINANCING ACTIVITIES

Cash paid for redemptions of Units	    (643,368)	    (777,030)

Net cash used for financing activities	   (643,368)	    (777,030)

Net increase (decrease) in unrestricted cash	11,247	(279,028)

Unrestricted cash at beginning of period	  6,584,973	    8,331,036

Unrestricted cash at end of period	   6,596,220	     8,052,008





<fn>

	The accompanying notes are an integral part
	of these financial statements.
</table>
<page> <table> MORGAN STANLEY CORNERSTONE FUND II L.P.
CONDENSED SCHEDULES OF INVESTMENTS
June 30, 2008 (Unaudited) and December 31, 2007


					<caption>


Futures and Forward Contracts
       Long
   Unrealized
  Gain/(Loss)

Percentage of
   Net Assets
    Short
Unrealized
Gain/(Loss)

Percentage of
   Net Assets
        Net
   Unrealized
   Gain/(Loss)

$
%
$
%
   $

June 30, 2008, Partnership Net Assets:  $7,037,827





<c>
<c>
<c>
<c>
<c>
Commodity
         4,230
        0.06
           ?
           ?
         4,230
Equity
           ?
           ?
       102,616
        1.46
     102,616
Foreign currency
     107,318
        1.52
   (44,790)
       (0.64)
62,528
Interest rate
          ?
          ?
    13,071
        0.19
   13,071






     Grand Total:
     111,548
        1.58
    70,897
        1.01
     182,445

     Unrealized Currency Gain





    100,875

     Total Net Unrealized Gain



     283,320



     98,394


December 31, 2007, Partnership Net Assets:  $7,003,517









Commodity
         5,659
        0.08
  (1,460)
         (0.02)
     4,199
Equity
       17,639
        0.25
           (3,360)
         (0.05)
  14,279
Foreign currency
      (23,706)
       (0.34)
   (45,218)
         (0.65)
 (68,924)
Interest rate
       24,883
        0.36
    30,805
          0.44
     55,688






     Grand Total:
       24,475
        0.35
   (19,233)
         (0.28)
      5,242

     Unrealized Currency Gain





     93,152

     Total Net Unrealized Gain



         98,394








<fn>



The accompanying notes are an integral part
 of these financial statements.

</table>


<page> MORGAN STANLEY CORNERSTONE FUND II L.P.
NOTES TO FINANCIAL STATEMENTS
June 30, 2008
(Unaudited)

The unaudited financial statements contained herein include, in
the opinion of management, all adjustments necessary for a fair
presentation of the results of operations and financial condition
of Morgan Stanley Cornerstone Fund II L.P. (the "Partnership").
The financial statements and condensed notes herein should be read
in conjunction with the Partnership's December 31, 2007, Annual
Report on Form 10-K.

1.  Organization
Morgan Stanley Cornerstone Fund II L.P. is a New York limited
partnership organized in 1983 to engage in the speculative trading
of futures contracts, options on futures contracts, and forward
contracts on foreign currencies and other commodity interests
(collectively, "Futures Interests").  The Partnership is one of
the Morgan Stanley Cornerstone Funds, comprised of the
Partnership, Morgan Stanley Cornerstone Fund III L.P., and Morgan
Stanley Cornerstone Fund IV L.P.

The Partnership?s general partner is Demeter Management
Corporation ("Demeter"). The commodity brokers are Morgan Stanley
& Co. Incorporated ("MS&Co.") and Morgan Stanley & Co.
International plc ("MSIP").  MS&Co. also acts as the counterparty
on all trading of foreign currency forward contracts. MSIP serves
as the commodity broker for trades on the London Metal Exchange.
Demeter, MS&Co., and MSIP are wholly-owned subsidiaries of Morgan
Stanley.  The trading managers to the Partnership are Northfield
Trading L.P. and John W. Henry & Company, Inc. (individually, a
"Trading Manager", or collectively, the "Trading Managers").

2.  Related Party Transactions
The Partnership's cash is on deposit with MS&Co. and MSIP in
futures, forward, and options trading accounts to meet margin
requirements as needed.  Monthly, MS&Co. pays the Partnership
interest income on 80% of its average daily Net Assets at a rate
equal to the average yield on 13-week U.S. Treasury bills. The
Partnership pays brokerage commissions to MS&Co.

3.  Income Taxes
No provision for income taxes has been made in the accompanying
financial statements, as partners are individually responsible
for reporting income or loss based upon their respective share of
the Partnership?s revenues or expenses for income tax purposes.
The Partnership files U.S. federal and state tax returns.  The
2004 through 2007 tax years generally remain subject to
examination by U.S. federal and most state tax authorities.



4.  Financial Instruments
The Partnership trades Futures Interests.  Futures and forwards
represent contracts for delayed delivery of an instrument at a
specified date and price.  Risk arises from changes in the value
of these contracts and the potential inability of counterparties
to perform under the terms of the contracts.  There are numerous
factors which may significantly influence the market value of
these contracts, including interest rate volatility.

The market value of exchange-traded contracts is based on the
settlement price quoted by the exchange on the day with respect
to which market value is being determined.  If an exchange-traded
contract could not have been liquidated on such day due to the
operation of daily limits or other rules of the exchange, the
settlement price shall be the settlement price on the first
subsequent day on which the contract could be liquidated.  The
market value of off-exchange-traded contracts is based on the
fair market value quoted by the counterparty.

The Partnership?s contracts are accounted for on a trade-date
basis and marked to market on a daily basis.  The Partnership
accounts for its derivative investments in accordance with the
provisions of Statement of Financial Accounting Standards No.
133, "Accounting for Derivative Instruments and Hedging
Activities" ("SFAS No. 133").  SFAS No. 133 defines a derivative
as a financial instrument or other contract that has all three of
the following characteristics:

1)	One or more underlying notional amounts or payment
provisions;
2)	Requires no initial net investment or a smaller initial net
investment than would be required relative to changes in
market factors;
3)	Terms require or permit net settlement.

Generally, derivatives include futures, forward, swap or options
contracts, and other financial instruments with similar
characteristics such as caps, floors, and collars.

The net unrealized gains (losses) on open contracts, reported as a
component of "Trading Equity" on the Statements of Financial
Condition, and their longest contract maturities were as follows:
<table> <caption>
                 Net Unrealized Gains/(Losses)
                        On Open Contracts                 Longest Maturities

                Exchange-  Off-Exchange-             Exchange-  Off-Exchange-
Date             Traded      Traded        Total      Traded       Traded
                   $            $            $

	            <c>	      <c>	 <c>	<c>	<c>
Jun. 30, 2008	219,113	64,207	283,320	Dec. 2009	Sep. 2008
Dec. 31, 2007	160,568	(62,174)	 98,394	Dec. 2008	Mar. 2008
</table>
The Partnership has credit risk associated with counterparty non-
performance.  As of the date of the financial statements, the
credit risk associated with the instruments in which the
Partnership trades is limited to the amounts reflected in the
Partnership's Statements of Financial Condition.




The Partnership also has credit risk because MS&Co. and MSIP act
as the futures commission merchants or the counterparties, with
respect to most of the Partnership?s assets. Exchange-traded
futures, exchange-traded forward, and exchange-traded futures-
styled options contracts are marked to market on a daily basis,
with variations in value settled on a daily basis. MS&Co. and
MSIP, each acting as a commodity broker for the Partnership?s
exchange-traded futures, exchange-traded forward, and exchange-
traded futures-styled options contracts, are required, pursuant to
regulations of the Commodity Futures Trading Commission ("CFTC"),
to segregate from their own assets, and for the sole benefit of
their commodity customers, all funds held by them with respect to
exchange-traded futures, exchange-traded forward, and exchange-
traded futures-styled options contracts, including an amount equal
to the net unrealized gains (losses) on all open exchange-traded
futures, exchange-traded forward, and exchange-traded futures-
styled options contracts, which funds, in the aggregate, totaled
$7,030,174 and $7,190,283 at June 30, 2008, and December 31, 2007,
respectively. With respect to the Partnership?s off-

<page> MORGAN STANLEY CORNERSTONE FUND II L.P.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)

exchange-traded forward currency contracts, there are no daily
settlements of variation in value, nor is there any requirement
that an amount equal to the net unrealized gains (losses) on such
contracts be segregated.  However, the Partnership is required to
meet margin requirements equal to the net unrealized loss on open
forward currency contracts in the Partnership accounts with the
counterparty, which is accomplished by daily maintenance of the
cash balance in a custody account held at MS&Co.  With respect to
those off-exchange-traded forward currency contracts, the
Partnership is at risk to the ability of MS&Co., the sole
counterparty on all such contracts, to perform. The Partnership
has a netting agreement with MS&Co. This agreement, which seeks to
reduce both the Partnership?s and MS&Co.?s exposure on off-
exchange-traded forward currency contracts, should materially
decrease the Partnership?s credit risk in the event of MS&Co.?s
bankruptcy or insolvency.

5.  New Accounting Developments
In September 2006, the Financial Accounting Standards Board
("FASB") issued Statement of Financial Accounting Standards No.
157 ("SFAS 157"), "Fair Value Measurements".  SFAS 157 requires
use of a fair value hierarchy that prioritizes the inputs to
valuation techniques used to measure fair value into three
levels: Level 1 - quoted market prices in active markets for

<page> MORGAN STANLEY CORNERSTONE FUND II L.P.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)


identical assets and liabilities; Level 2 - inputs other than
quoted market prices that are observable for the asset or
liability, either directly or indirectly (including quoted prices
for similar investments, interest rates, credit risk); and Level
3 - unobservable inputs for the asset or liability (including the
Partnership?s own assumptions used in determining the fair value
of investments).

Demeter evaluated the impact of adopting SFAS 157 on the
Partnership?s financial statements.  The Partnership adopted SFAS
157 as of January 1, 2008.  Based on its analysis, the effect of
applying SFAS 157 to the investments included in the financial
statements does not have a material impact on the Partnership?s
financial statements.

The following table summarizes the valuation of the Partnership?s
investments by the above SFAS 157 fair value hierarchy as of June
30, 2008:  <table> <caption>



Assets
 Quoted Prices in
Active Markets for
  Identical Assets
        (Level 1)
Significant Other
   Observable
       Inputs
     (Level 2)
 Significant
  Unobservable
    Inputs
  (Level 3)




  Total


<c>
<c>
 <c>

<c>
Unrealized gain on open contracts
         $219,113
$64,207
  n/a

   $283,320
</table>

In March 2008, the FASB issued SFAS No. 161, Disclosures about
Derivative Instruments and Hedging Activities ("SFAS 161").  SFAS

<page> MORGAN STANLEY CORNERSTONE FUND II L.P.
NOTES TO FINANCIAL STATEMENTS (CONCLUDED)


161 is intended to improve financial reporting about derivative
instruments and hedging activities by requiring enhanced
disclosures to enable investors to better understand how those
instruments and activities are accounted for; how and why they are
used; and their effects on a Partnership?s financial position,
financial performance, and cash flows.  SFAS 161 is effective for
financial statements issued for fiscal years beginning after
November 15, 2008, and interim periods within those fiscal years.
The Partnership is currently evaluating the impact that the
adoption of SFAS No. 161 will have on its financial statement
disclosures.

6.  Restricted and Unrestricted Cash
As reflected on the Partnership?s Statements of Financial
Condition, restricted cash equals the cash portion of assets on
deposit to meet margin requirements plus the cash required to
offset unrealized losses on foreign currency forwards and options
and offset losses on offset London Metal Exchange positions.  All
of these amounts are maintained separately.  Cash that is not
classified as restricted cash is therefore classified as
unrestricted cash.






<page> Item 2. MANAGEMENT?S DISCUSSION AND ANALYSIS OF FINANCIAL
        CONDITION AND RESULTS OF OPERATIONS

Liquidity.  The Partnership deposits its assets with MS&Co. and
MSIP as commodity brokers in separate futures, forward, and
options trading accounts established for each Trading Manager.
Such assets are used as margin to engage in trading and may be
used as margin solely for the Partnership?s trading. The assets
are held in either non-interest bearing bank accounts or in
securities and instruments permitted by the CFTC for investment of
customer segregated or secured funds.  Since the Partnership?s
sole purpose is to trade in futures, forwards, and options, it is
expected that the Partnership will continue to own such liquid
assets for margin purposes.

The Partnership?s investment in futures, forwards, and options
may, from time to time, be illiquid.  Most U.S. futures exchanges
limit fluctuations in prices during a single day by regulations
referred to as "daily price fluctuations limits" or "daily limits".
Trades may not be executed at prices beyond the daily limit.  If
the price for a particular futures or options contract has
increased or decreased by an amount equal to the daily limit,
positions in that futures or options contract can neither be taken
nor liquidated unless traders are willing to effect trades at or
within the limit.  Futures prices have occasionally moved the
daily limit for several consecutive days with little or no
trading.  These market conditions could prevent the Partnership
<page> from promptly liquidating its futures or options contracts
and result in restrictions on redemptions.

There is no limitation on daily price moves in trading forward
contracts on foreign currencies.  The markets for some world
currencies have low trading volume and are illiquid, which may
prevent the Partnership from trading in potentially profitable
markets or prevent the Partnership from promptly liquidating
unfavorable positions in such markets, subjecting it to
substantial losses.  Either of these market conditions could
result in restrictions on redemptions.  For the periods covered by
this report, illiquidity has not materially affected the
Partnership?s assets.

There are no known material trends, demands, commitments, events,
or uncertainties at the present time that are reasonably likely to
result in the Partnership?s liquidity increasing or decreasing in
any material way.

Capital Resources.  The Partnership does not have, nor does it
expect to have, any capital assets.  Redemptions of units of
limited partnership interest ("Unit(s)") in the future will affect
the amount of funds available for investments in futures,
forwards, and options in subsequent periods. It is not possible to
estimate the amount, and therefore the impact, of future outflows
of Units.

<page> There are no known material trends, favorable or
unfavorable, that would affect, nor any expected material changes
to, the Partnership?s capital resource arrangements at the present
time.

Off-Balance Sheet Arrangements and Contractual Obligations.  The
Partnership does not have any off-balance sheet arrangements, nor
does it have contractual obligations or commercial commitments to
make future payments that would affect its liquidity or capital
resources.

Results of Operations
General.  The Partnership?s results depend on the Trading Managers
and the ability of each Trading Manager?s trading program to take
advantage of price movements in the futures, forward, and options
markets.  The following presents a summary of the Partnership?s
operations for the three and six month periods ended June 30,
2008, and 2007, and a general discussion of its trading activities
during each period.  It is important to note, however, that the
Trading Managers trade in various markets at different times and
that prior activity in a particular market does not mean that such
market will be actively traded by the Trading Managers or will be
profitable in the future. Consequently, the results of operations
of the Partnership are difficult to discuss other than in the
context of the Trading Managers? trading activities on behalf of
the Partnership during the period in question. Past performance is
no guarantee of future results.
<page> The Partnership?s results of operations set forth in the
financial statements on pages 2 through 14 of this report are
prepared in accordance with accounting principles generally
accepted in the United States of America, which require the use of
certain accounting policies that affect the amounts reported in
these financial statements, including the following:  The
contracts the Partnership trades are accounted for on a trade-date
basis and marked to market on a daily basis.  The difference
between their cost and market value is recorded on the Statements
of Operations as "Net change in unrealized trading gain (loss)"
for open (unrealized) contracts, and recorded as "Realized trading
gain (loss)" when open positions are closed out.  The sum of these
amounts constitutes the Partnership?s trading results.  The market
value of a futures contract is the settlement price on the
exchange on which that futures contract is traded on a particular
day. The value of a foreign currency forward contract is based on
the spot rate as of the close of business.  Interest income, as
well as management fees, incentive fees, brokerage commissions,
transaction fees and costs, and administrative expenses of the
Partnership are recorded on an accrual basis.

Demeter believes that, based on the nature of the operations of
the Partnership, no assumptions relating to the application of
critical accounting policies other than those presently used
could reasonably affect reported amounts.

<page> For the Three and Six Months Ended June 30, 2008
The Partnership recorded total trading results including interest
income totaling $179,152 and expenses totaling $148,492,
resulting in net income of $30,660 for the three months ended June
30, 2008. The Partnership?s net asset value per Unit increased
from $3,625.10 at March 31, 2008, to $3,644.10 at June 30, 2008.

The most significant trading gains of approximately 2.0% were
recorded in the global interest rate sector primarily during May
and June from short positions in European and U.S. fixed-income
futures as prices declined amid concerns of accelerating
inflation due to surging commodity prices, thereby increasing the
likelihood that the European Central Bank and U.S. Federal
Reserve would raise interest rates in the near-term. Within the
global stock index sector, gains of 0.8% were experienced during
June from short positions in European and Pacific Rim equity
index futures as prices moved sharply lower throughout the month
on concerns that record commodity prices and additional subprime-
related writedowns would erode corporate earnings and continue to
slow global economic growth.  In addition, prices of European
stock index futures were pressured lower after government reports
revealed an unexpected drop in Germany?s consumer confidence and
a continued housing slump in the United Kingdom. Smaller gains of
0.4% were achieved within the energy sector primarily during May
from long positions in gasoline futures as prices moved higher
due to supply threats in Nigeria and Iraq, growing Asian fuel
<page> consumption, an unexpected decline in domestic
inventories, and news that service industries in the U.S.
unexpectedly had grown for the first time since December, thereby
signaling higher energy demand.  Elsewhere, long positions in
natural gas futures resulted in gains during May and June as
prices increased amid declining production in Western Canada,
forecasts for an active hurricane season in the Atlantic, and a
drop in the value of the U.S. dollar. A portion of the
Partnership?s gains during the quarter was offset by losses of
approximately 2.2% incurred in the currency sector from long
positions in the Japanese yen, Swiss franc, euro, and Turkish
lira versus the U.S. dollar as the value of the U.S. dollar moved
higher against these currencies during April after the U.S.
Institute for Supply Management?s manufacturing index
unexpectedly moved higher and a U.S. economic report showed
private sector jobs unexpectedly increased in March. Additional
losses were incurred during April and June from short positions
in the South African rand versus the U.S. dollar as the value of
the South African rand increased amid strong economic data out of
South Africa. Lastly, losses were experienced from both short and
long positions in the New Zealand dollar versus the U.S. dollar
as the value of the New Zealand dollar moved without consistent
direction throughout the quarter.


<page>
The Partnership recorded total trading results including interest
income totaling $937,045 and expenses totaling $335,282, resulting
in net income of $601,763 for the six months ended June 30, 2008.
The Partnership?s net asset value per Unit increased from
$3,344.64 at December 31, 2007, to $3,644.10 at June 30, 2008.

The most significant trading gains of approximately 5.1% were
experienced in the currency sector during February, March, May,
and June from long positions in the euro, Mexican peso, Swiss
franc, and Czech koruna versus the U.S. dollar as the value of
the U.S. dollar moved lower against its major rivals after
weaker-than-expected manufacturing data from the Federal Reserve
Bank of Philadelphia reignited fears of an economic slowdown in
the U.S.  In addition, the value of the U.S. dollar continued to
decline after U.S. government reports showed a rise in
unemployment and slower-than-expected fourth quarter 2007 Gross
Domestic Product growth. Lastly, the value of the U.S. dollar was
pulled lower due to several interest rate cuts by the U.S.
Federal Reserve, as well as indications that interest rates would
continue to decline. Meanwhile, gains were experienced during
February from long positions in the Chilean peso versus the U.S.
dollar as the value of the U.S. dollar declined due to the
aforementioned concerns of an economic slowdown. Newly
established short positions in the Chilean peso versus the U.S.
dollar recorded gains during May and June as the value of the
<page> Chilean peso declined due to weaker-than-expected economic
data out of Chile. Elsewhere in the currency sector, smaller
gains were recorded from short positions in the Korean won versus
the U.S. dollar throughout the first half of the year as the
value of the Korean won fell amid concerns of a rising Current-
Account deficit out of Korea. Gains of approximately 2.2% were
recorded in the global fixed-income sector during January and
March from long positions in Japanese fixed-income futures as
prices increased amid stronger demand, following a sharp decline
in global equity markets and concerns that a possible economic
recession in the United States would weaken the global economy.
Furthermore, prices of Japanese fixed-income futures increased on
speculation that the Bank of Japan would cut interest rates this
year. During May, gains were experienced from short positions in
short-term European and U.S. fixed-income futures as prices fell
after a government report showed the U.S. economy grew at a
faster rate during the first quarter than previously stated.
Additionally, prices fell further on news of accelerating
inflation and better-than-expected growth in the Euro-Zone, which
boosted speculation that the European Central Bank might not cut
interest rates at its next policy meeting. During June, gains
were recorded from short positions in short-term European fixed-
income futures as prices moved lower after the European Central
Bank left its benchmark interest rate unchanged at 4.0% and
signaled it might raise borrowing costs in July in order to
<page> combat accelerating inflation in the Euro-Zone. Within the
global stock index sector, gains of approximately 2.0% were
achieved during January, March, and June from short positions in
European stock index futures as prices moved lower on concerns
that a persistent U.S. housing slump, mounting losses linked to
U.S. subprime mortgage investments, and a weakening job market
would restrain consumer spending. Smaller gains of 0.4% were
recorded within the energy sector during February and May from
long futures positions in heating oil and gasoline as prices
increased due to speculation that OPEC might cut production,
forecasts of cold weather and heavy snow in the U.S. Northeast,
and ongoing geopolitical concerns in the Middle East.  Elsewhere,
long positions in natural gas futures resulted in gains during
May and June as prices increased amid declining production in
Western Canada, forecasts for an active hurricane season in the
Atlantic, and a drop in the value of the U.S. dollar.

For the Three and Six Months Ended June 30, 2007
The Partnership recorded total trading results including interest
income totaling $1,313,753 and expenses totaling $224,088,
resulting in net income of $1,089,665 for the three months ended
June 30, 2007. The Partnership?s net asset value per Unit
increased from $3,077.94 at March 31, 2007, to $3,519.86 at June
30, 2007.

<page> The most significant trading gains of approximately 5.5%
were recorded in the global interest rate sector primarily during
May and June from short positions in European fixed-income
futures as prices weakened after news from the Ifo Institute that
German business sentiment climbed to the second-highest level on
record and news of an increasing U.K. consumer confidence index.
European interest rate futures prices continued to fall after a
report showing real Gross Domestic Product in the Euro-Zone had
increased more-than-expected in the first quarter of 2007, news
that Germany's seasonally adjusted unemployment rate had reached
its lowest level since 1995, and news that housing prices in the
United Kingdom had shown their biggest jump in 2007.  Elsewhere,
gains were recorded from short positions in U.S. fixed-income
futures as prices moved lower during May and June after the
Philadelphia Federal Reserve's index of regional manufacturing
increased more-than-expected in April, Federal Reserve Bank of
Richmond President Jeffrey Lacker stated there were still
inflationary concerns present in the U.S. economy, and the
Conference Board's index of leading economic indicators showed
that five of the ten categories for the U.S. economy showed
improvement.  Additional gains of approximately 5.3% were
experienced in the currency sector primarily during April and May
from short positions in the Japanese yen versus the U.S. dollar
as the value of the Japanese yen weakened relative to its major
rivals in a continuation of the carry-trade after news that the
<page> Tankan survey was weaker-than-expected and a decline in
Japanese industrial production increased speculation that
Japanese economic growth was not sufficient to warrant an
increase in interest rates by the Bank of Japan.  Elsewhere,
gains were recorded from long positions in the Brazilian real and
Australian dollar versus the U.S. dollar primarily during April
and May as these currencies moved higher relative to the U.S.
dollar after strong economic data out of Australia and Brazil
added to growing investor sentiment that the respective Central
Banks of these countries would raise interest rates in order to
combat inflation.  Additionally, the value of the U.S. dollar
declined against these currencies leading up to and after the
U.S. Federal Reserve?s decision to leave interest rates steady at
5.25%.  Smaller gains of approximately 3.0% were recorded in the
global stock index sector primarily during April and May from
long positions in U.S. and European equity index futures as
prices moved higher on continued strong corporate earnings and
increased merger and acquisition activity.  Furthermore, gains
were recorded during June from long positions in Hong Kong and
Taiwanese equity index futures as prices increased amid investor
optimism regarding future earnings in the technology sector.  A
portion of the Partnership?s gains during the quarter was offset
by losses of approximately 0.6% incurred in the energy markets
throughout the quarter from both short and long positions in
<page> natural gas futures as prices moved without consistent
direction due to conflicting data regarding supply and demand.


The Partnership recorded total trading results including interest
income totaling $570,568 and expenses totaling $441,859, resulting
in net income of $128,709 for the six months ended June 30, 2007.
The Partnership?s net asset value per Unit increased from
$3,453.29 at December 31, 2006, to $3,519.86 at June 30, 2007.

The most significant trading gains of approximately 4.8% were
experienced in the global interest rate sector primarily during
January, May, and June from short positions in European fixed-
income futures as prices fell initially after reports showed
confidence in the Euro-Zone economy stayed close to a six-year
high in December.  Prices continued to fall after strong economic
data reported in the United Kingdom and Germany increased
inflation concerns.  During May and June, European interest rate
futures prices declined after a report showing real Gross
Domestic Product in the Euro-Zone had increased more than
expected in the first quarter of 2007, news that Germany's
seasonally adjusted unemployment rate had reached its lowest
level since 1995, and data indicating that housing prices in the
United Kingdom had shown their biggest jump in 2007.  Elsewhere,
gains were recorded during January from short positions in U.S.
interest rate futures as prices fell amid speculation that the
U.S. Federal Reserve would not cut interest rates during the
first quarter of 2007.  Further gains were experienced from short
<page> positions in U.S. interest rate futures as prices declined
during May and June after Federal Reserve Bank of Richmond
President Jeffrey Lacker stated that there were still
inflationary concerns present in the U.S. economy and the
Conference Board's index of leading economic indicators showed
that five of the ten categories for the U.S. economy showed
improvement.  Smaller gains of approximately 0.3% were recorded
in the global stock index sector primarily during April and May
from long positions in U.S. and European equity index futures as
prices moved higher on continued strong corporate earnings and
increased merger and acquisition activity.  Furthermore, gains
were recorded during June from long positions in Hong Kong and
Taiwanese equity index futures as prices increased amid investor
optimism regarding future earnings in the technology sector.  A
portion of the Partnership?s gains in the first six months of the
year was offset by losses of approximately 3.8% recorded in the
currency sector primarily during the first quarter of the year.
During January, losses were incurred from both short and long
positions in the South African rand versus the U.S. dollar as the
value of the South African rand moved without consistent
direction due to conflicting economic data out of South Africa.
Further losses were recorded from short positions in the South
African rand versus the U.S. dollar during March as the value of
the South African rand reversed sharply higher relative to the
U.S. dollar on expectations that increased demand for South
Africa?s exports would significantly improve the South African
economy.  Elsewhere, losses were experienced from short positions
<page> in the Mexican peso versus the U.S. dollar as the value of
the Mexican peso strengthened on increased speculation of an
interest rate hike from the Bank of Mexico.  Smaller losses of
approximately 0.6% were incurred in the energy markets primarily
during March, April, May, and June from both short and long
positions in natural gas futures as prices moved without
consistent direction due to conflicting data regarding supply and
demand.



Item 3.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Introduction
The Partnership is a commodity pool engaged primarily in the
speculative trading of futures, forwards, and options.  The
market-sensitive instruments held by the Partnership are acquired
for speculative trading purposes only and, as a result, all or
substantially all of the Partnership?s assets are at risk of
trading loss.  Unlike an operating company, the risk of market-
sensitive instruments is inherent to the primary business activity
of the Partnership.

The futures, forwards, and options traded by the Partnership
involve varying degrees of related market risk.  Market risk is
often dependent upon changes in the level or volatility of
interest rates, exchange rates, and prices of financial
instruments and commodities, factors that result in frequent
changes in the fair value of the Partnership?s open positions,
and consequently in its earnings, whether realized or unrealized,
<page> and cash flow.  Gains and losses on open positions of
exchange-traded futures, exchange-traded forward, and exchange-
traded futures-styled options contracts are settled daily through
variation margin.  Gains and losses on off-exchange-traded
forward currency contracts are settled upon termination of the
contract.  However, the Partnership is required to meet margin
requirements equal to the net unrealized loss on open forward
currency contracts in the Partnership accounts with the
counterparty, which is accomplished by daily maintenance of the
cash balance in a custody account held at MS&Co.

The Partnership?s total market risk may increase or decrease as
it is influenced by a wide variety of factors, including, but not
limited to, the diversification among the Partnership?s open
positions, the volatility present within the markets, and the
liquidity of the markets.

The face value of the market sector instruments held by the
Partnership is typically many times the applicable margin
requirements.  Margin requirements generally range between 2% and
15% of contract face value.  Additionally, the use of leverage
causes the face value of the market sector instruments held by
the Partnership typically to be many times the total
capitalization of the Partnership.

The Partnership?s past performance is no guarantee of its future
results.  Any attempt to numerically quantify the Partnership?s
<page> market risk is limited by the uncertainty of its
speculative trading.  The Partnership?s speculative trading and
use of leverage may cause future losses and volatility (i.e.,
"risk of ruin") that far exceed the Partnership?s experiences to
date   under the "Partnership?s Value at Risk in Different Market
Sectors" section and significantly exceed the Value at Risk
("VaR") tables disclosed.

Limited partners will not be liable for losses exceeding the
current net asset value of their investment.

Quantifying the Partnership?s Trading Value at Risk
The following quantitative disclosures regarding the Partnership?s
market risk exposures contain "forward-looking statements" within
the meaning of the safe harbor from civil liability provided for
such statements by the Private Securities Litigation Reform Act of
1995 (set forth in Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934).  All
quantitative disclosures in this section are deemed to be forward-
looking statements for purposes of the safe harbor, except for
statements of historical fact.

The Partnership accounts for open positions on the basis of mark
to market accounting principles.  Any loss in the market value of
the Partnership?s open positions is directly reflected in the
Partnership?s earnings and cash flow.
<page> The Partnership?s risk exposure in the market sectors
traded by the Trading Managers is estimated below in terms of VaR.
The Partnership estimates VaR using a model based upon historical
simulation (with a confidence level of 99%) which involves
constructing a distribution of hypothetical daily changes in the
value of a trading portfolio.  The VaR model takes into account
linear exposures to risk including equity and commodity prices,
interest rates, foreign exchange rates, and correlation among
these variables. The hypothetical changes in portfolio value are
based on daily percentage changes observed in key market indices
or other market factors ("market risk factors") to which the
portfolio is sensitive.  The one-day 99% confidence level of the
Partnership?s VaR corresponds to the negative change in portfolio
value that, based on observed market risk factors, would have been
exceeded once in 100 trading days, or one day in 100.  VaR
typically does not represent the worst case outcome.   Demeter
uses approximately four years of daily market data (1,000
observations) and re-values its portfolio (using delta-gamma
approximations) for each of the historical market moves that
occurred over this time period.  This generates a probability
distribution of daily "simulated profit and loss" outcomes.  The
VaR is the appropriate percentile of this distribution.  For
example, the 99% one-day VaR would represent the 10th worst
outcome from Demeter?s simulated profit and loss series.

<page> The Partnership?s VaR computations are based on the risk
representation of the underlying benchmark for each instrument or
contract and do not distinguish between exchange and non-exchange
dealer-based instruments. They are also not based on exchange
and/or dealer-based maintenance margin requirements.

VaR models, including the Partnership?s, are continually evolving
as trading portfolios become more diverse and modeling techniques
and systems capabilities improve.  Please note that the VaR model
is used to numerically quantify market risk for historic
reporting purposes only and is not utilized by either Demeter or
the Trading Managers in their daily risk management activities.
Please further note that VaR as described above may not be
comparable to similarly-titled measures used by other entities.

The Partnership?s Value at Risk in Different Market Sectors
The following table indicates the VaR associated with the
Partnership?s open positions as a percentage of total Net Assets
by primary market risk category at June 30, 2008, and 2007. At
June 30, 2008, and 2007, the Partnership?s total capitalization
was approximately $7 million and $8 million, respectively.











<page>
Primary Market              June 30, 2008      June 30, 2007
Risk Category               Value at Risk      Value at Risk

Currency	        (1.01)%	 (2.13)%

Equity	        (0.72)	(0.36)

Interest Rate	(0.17)	     (0.45)

Commodity                    	(0.15)	(0.52)

Aggregate Value at Risk	      (0.82)%	(2.31)%


The VaR for a market category represents the one-day downside
risk for the aggregate exposures associated with this market
category.  The Aggregate Value at Risk listed above represents
the VaR of the Partnership?s open positions across all the market
categories, and is less than the sum of the VaRs for all such
market categories due to the diversification benefit across asset
classes.

Because the business of the Partnership is the speculative
trading of futures, forwards, and options, the composition of its
trading portfolio can change significantly over any given time
period, or even within a single trading day.  Such changes could
positively or negatively materially impact market risk as
measured by VaR.

The table below supplements the quarter-end VaR set forth above
by presenting the Partnership?s high, low, and average VaR, as a
percentage of total Net Assets for the four quarter-end reporting
periods from July 1, 2007, through June 30, 2008.
<page>
Primary Market Risk Category	High	     Low	     Average
Currency	(1.73)%	(0.60)%	(1.13)%

Equity	(0.72)	(0.11)	(0.46)

Interest Rate	(0.45)	(0.17)	(0.29)

Commodity	(0.41)	  -	(0.24)


Aggregate Value at Risk	(2.01)%	(0.82)%	(1.30)%


Limitations on Value at Risk as an Assessment of Market Risk
VaR models permit estimation of a portfolio?s aggregate market
risk exposure, incorporating a range of varied market risks,
reflect risk reduction due to portfolio diversification or hedging
activities, and can cover a wide range of portfolio assets.
However, VaR risk measures should be viewed in light of the
methodology?s limitations, which include, but may not be limited
to the following:
*	past changes in market risk factors will not always result in
accurate predictions of the distributions and correlations of
future market movements;
*	changes in portfolio value caused by market movements may
differ from those of the VaR model;
*	VaR results reflect past market fluctuations applied to
current trading positions while future risk depends on future
positions;


<page>
*	VaR using a one-day time horizon does not fully capture the
market risk of positions that cannot be liquidated or hedged
within one day; and
*	the historical market risk factor data used for VaR estimation
may provide only limited insight into losses that could be
incurred under certain unusual market movements.

In addition, the VaR tables above, as well as the past performance
of the Partnership, give no indication of the Partnership?s
potential "risk of ruin".

The VaR tables provided present the results of the Partnership?s
VaR for each of the Partnership?s market risk exposures and on an
aggregate basis at June 30, 2008 and 2007, and for the four
quarter-end reporting periods from July 1, 2007, through June 30,
2008. VaR is not necessarily representative of the Partnership?s
historic risk, nor should it be used to predict the Partnership?s
future financial performance or its ability to manage or monitor
risk.  There can be no assurance that the Partnership?s actual
losses on a particular day will not exceed the VaR amounts
indicated above or that such losses will not occur more than once
in 100 trading days.



<page> Non-Trading Risk
The Partnership has non-trading market risk on its foreign cash
balances.  These balances and any market risk they may represent
are immaterial.

The Partnership also maintains a substantial portion of its
available assets in cash at MS&Co.; as of June 30, 2008, such
amount was equal to approximately 94% of the Partnership?s net
asset value.  A decline in short-term interest rates would result
in a decline in the Partnership?s cash management income. This
cash flow risk is not considered to be material.

Materiality, as used throughout this section, is based on an
assessment of reasonably possible market movements and any
associated potential losses, taking into account the leverage,
optionality, and multiplier features of the Partnership?s market-
sensitive instruments, in relation to the Partnership?s Net
Assets.

Qualitative Disclosures Regarding Primary Trading Risk Exposures
The following qualitative disclosures regarding the Partnership?s
market risk exposures - except for (A) those disclosures that are
statements of historical fact and (B) the descriptions of how the
Partnership manages its primary market risk exposures - constitute
forward-looking statements within the meaning of Section 27A of
the Securities Act and Section 21E of the Securities Exchange Act.
The Partnership?s primary market risk exposures, as well as the
<page> strategies used and to be used by Demeter and the Trading
Managers for managing such exposures, are subject to numerous
uncertainties, contingencies and risks, any one of which could
cause the actual results of the Partnership?s risk controls to
differ materially from the objectives of such strategies.
Government interventions, defaults and expropriations, illiquid
markets, the emergence of dominant fundamental factors, political
upheavals, changes in historical price relationships, an influx of
new market participants, increased regulation, and many other
factors could result in material losses, as well as in material
changes to the risk exposures and the risk management strategies
of the Partnership.  Investors must be prepared to lose all or
substantially all of their investment in the Partnership.

The following were the primary trading risk exposures of the
Partnership at June 30, 2008, by market sector.  It may be
anticipated, however, that these market exposures will vary
materially over time.

Currency.  The largest market exposure of the Partnership at June
30, 2008, was to the currency sector.  The Partnership?s currency
exposure is to exchange rate fluctuations, primarily fluctuations
which disrupt the historical pricing relationships between
different currencies and currency pairs.  Interest rate changes,
as well as political and general economic conditions influence
these fluctuations. The Partnership?s primary exposure at June 30,
2008, was to outright U.S. dollar positions.  Outright positions
<page> consist of the U.S. dollar vs. other currencies.  These
other currencies include major and minor currencies.  Demeter does
not anticipate that the risk associated with the Partnership?s
currency trades will change significantly in the future.

Equity.  The second largest market exposure of the Partnership at
June 30, 2008, was to the global stock index sector, primarily to
equity price risk in the G-7 countries.  The G-7 countries consist
of France, the U.S., the United Kingdom, Germany, Japan, Italy,
and Canada.  The stock index futures traded by the Partnership are
by law limited to futures on broadly-based indices.  At June 30,
2008, the Partnership?s primary exposures were to the NASDAQ 100
(U.S.), DAX (Germany), S&P MIB (Italy), S&P 500 (U.S.), HANG SENG
(Hong Kong), EURO STOX 50 (Europe), TAIWAN (Taiwan), and FTSE 100
(United Kingdom) stock indices.  The Partnership is primarily
exposed to the risk of adverse price trends or static markets in
the U.S., European, and Asian stock indices.  Static markets would
not cause major market changes, but would make it difficult for
the Partnership to avoid trendless price movements, resulting in
numerous small losses.

Interest Rate.  The third largest market exposure of the
Partnership at June 30, 2008, was to the global interest rate
sector.  This exposure was primarily spread across European and
U.S. interest rate sectors. Interest rate movements directly
affect the price of the sovereign bond futures positions held by
the Partnership and indirectly affect the value of its stock index
<page> and currency positions.  Interest rate movements in one
country, as well as relative interest rate movements between
countries, materially impact the Partnership?s profitability. The
Partnership?s primary interest rate exposure is generally to
interest rate fluctuations in the U.S. and the other G-7
countries? interest rates. Demeter anticipates that the G-7
countries? interest rates will remain the primary interest rate
exposures of the Partnership for the foreseeable future.  The
speculative futures positions held by the Partnership may range
from short to long-term instruments.  Consequently, changes in
short, medium, or long-term interest rates may have an effect on
the Partnership.

Commodity.
Energy.  At June 30, 2008, the Partnership had exposure to
the energy sector.  The Partnership?s primary energy exposure
was to futures contracts in natural gas.  Price movements in
these markets result from geopolitical developments,
particularly in the Middle East, as well as weather patterns,
and other economic fundamentals. Significant profits and
losses, which have been experienced in the past, are expected
to continue to be experienced in the future. Natural gas has
exhibited volatility in price resulting from weather patterns
and supply and demand factors and will likely continue in
this choppy pattern.

<page> Qualitative Disclosures Regarding Non-Trading Risk Exposure
The following was the only non-trading risk exposure of the
Partnership at June 30, 2008:

Foreign Currency Balances.  The Partnership?s primary foreign
currency balances at June 30, 2008, were in euros, Japanese
yen, British pounds, and Hong Kong dollars. The Partnership
controls the non-trading risk of foreign currency balances by
regularly converting them back into U.S. dollars upon
liquidation of their respective positions.

Qualitative Disclosures Regarding Means of Managing Risk Exposure
The Partnership and the Trading Managers, separately, attempt to
manage the risk of the Partnership?s open positions in essentially
the same manner in all market categories traded. Demeter attempts
to manage market exposure by diversifying the Partnership?s assets
among different Trading Managers, each of whose strategies focus
on different market sectors and trading approaches, in a multi-
manager Partnership, and by monitoring the performance of the
Trading Managers daily. In addition, the Trading Managers
establish diversification guidelines, often set in terms of the
maximum margin to be committed to positions in any one market
sector or market-sensitive instrument.

Demeter monitors and controls the risk of the Partnership?s non-
trading instrument, cash.  Cash is the only Partnership investment
directed by Demeter, rather than the Trading Managers.
<page>
Item 4.	CONTROLS AND PROCEDURES
As of the end of the period covered by this quarterly report, the
President and Chief Financial Officer of Demeter, the general
partner of the Partnership, have evaluated the effectiveness of
the Partnership?s disclosure controls and procedures (as defined
in Rules 13a-15(e) and 15d-15(e) of the Exchange Act), and have
judged such controls and procedures to be effective.

Changes in International Control over Financial Reporting
There have been no material changes during the period covered by
this quarterly report in the Partnership?s internal control over
financial reporting (as defined in Rules 13a-15(f) and 15d-15(f)
of the Exchange Act) or in other factors that could significantly
affect these controls subsequent to the date of their evaluation.

Item 4T.	CONTROLS AND PROCEDURES
Not applicable.



<page> PART II.  OTHER INFORMATION

Item 1A. RISK FACTORS
Information regarding risk factors appears in Item 2.
?Management?s Discussion and Analysis of Financial Condition and
Results of Operations? and Item 3.  ?Quantitative and Qualitative
Disclosures about Market Risk? of this Form 10-Q.  There have been
no other material changes from the risk factors previously
referenced in the Partnership?s Report on Form 10-K for the fiscal
year ended December 31, 2007 and the Partnership?s Report on Form
10-Q for the quarter ended March 31, 2008.

Item 5.  OTHER INFORMATION
Limited Partners of the Partnership are advised that Demeter has
determined to withdraw from the Partnership effective November 30,
2008, and thereafter will commence dissolution of the Partnership
pursuant to the Partnership?s Limited Partnership Agreement.  In
connection with such withdrawal, Demeter will terminate trading
for the Partnership effective October 31, 2008, unless it becomes
necessary or is prudent to do so beforehand.  Following
termination of trading for the Partnership, all Partnership assets
will be paid interest at the rate equal to the average yield on
13-week U.S. Treasury Bills, with your share of interest credited
to your Units.  The management and brokerage fees on any assets
remaining in the Partnership after October 31, 2008, will be
<page> waived, given the absence of any further futures trading by
the Partnership.

Through November 30, 2008, qualified Limited Partners may, under
certain conditions, redeem some or all of their interest in the
Partnership and use the proceeds of such redemption to purchase an
interest in another Morgan Stanley managed futures partnership for
which Demeter is the general partner (an offering in any such
managed futures partnership is by prospectus or offering
memorandum only).  Otherwise, Limited Partners may simply redeem
their interest in the Partnership and receive the proceeds of such
redemption in cash.  Whether you exchange or redeem your
Partnership Units, there will be no minimum holding period
requirement or redemption charge.  Limited Partners who do not
redeem their interest in the Partnership prior to November 30,
2008, should be aware that final distribution of any remaining
Partnership assets is anticipated to be made on or about December
15, 2008.

Mr. Michael Durbin became listed as a principal of Demeter by the
National Futures Association on June 5, 2008.

Mr. Jose Morales became listed as a principal of Demeter by the
National Futures Association on June 23, 2008.



<page>
Item 6.  EXHIBITS
31.01	Certification of President of Demeter Management
Corporation, the general partner of the Partnership,
pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.02	Certification of Chief Financial Officer of Demeter
Management Corporation, the general partner of the
Partnership, pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002.

32.01	Certification of President of Demeter Management
Corporation, the general partner of the Partnership,
pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.

32.02	Certification of Chief Financial Officer of Demeter
Management Corporation, the general partner of the
Partnership, pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002.





























<page>










SIGNATURE



Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.




                        Morgan Stanley Cornerstone Fund II L.P.
                        (Registrant)

                        By: Demeter Management Corporation
                            (General Partner)

August 14, 2008         By: /s/Christian Angstadt
                               Christian Angstadt
                               Chief Financial Officer



The General Partner which signed the above is the only party
authorized to act for the Registrant.  The Registrant has no
principal executive officer, principal financial officer,
controller, or principal accounting officer and has no Board of
Directors.














- 14 -
- 7 -
<page> MORGAN STANLEY CORNERSTONE FUND II L.P.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)





DEAN WITTER CORNERSTONE FUND II
NOTES TO FINANCIAL STATEMENTS (CONTINUED)